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Wednesday, September 25, 2013

I have been worried about the health of U.S. consumer in the past month. I wonder around in different shopping centers on weekends, gathering my area's retail traffic, in order to predict the direction of the stock market. It does not look vibrant, to say the least. One may ask - why and how can a small town USA shopping center control the stock market? It can, because as a whole, America is a collage of densely populated shopping areas connected by the interstates. If you drive from one area to another you will find one retailer which is woven into the fabric of daily American life. The retailer I am talking about is Wal-Mart. This company can tell me about the state of the country. No, I am not exaggerating the power of lowest prices and their affect on consumers. Prices move inventory, period. Those who think that everything is fine with American consumer should take a quick look at WMT. I can't quite put my finger on what exactly is wrong at the moment, but the stock is telling me to be worried. So I am...

Here is something interesting that I saw when I plotted WMT over SPY and XRT. In September of 2012, WMT made a new high which was not confirmed by SPY and XRT. This time, in September of 2013, the picture is reversed.

Another interesting detail may be in the mix here. Last year, September FOMC meeting marked a dead high. Bernanke may be singing Britney Spears' song: "Oops!... I Did It Again". And yes, I can see that after some turbulence into mid-November, stock market resumed its march higher. Can we assume that everything is just fine, when WMT is making series of lower highs and lower lows? Only time will show...

Monday, September 9, 2013

Trading is a game of deception. Do not be fooled by these mini moves before a bigger leg down comes. Market likes to shake the players out at key reversal levels. One is coming up here. Be ready, be strong, be smart!

Friday, September 6, 2013

On my chart below I show a possible trip to 1600 for SPX. It is debatable by how much the Fed will taper at the September meeting. Based on weaker-than-expected jobs report today (especially the revisions), it may not taper at all. But I am not in a camp of no Septaper, and expect a small gesture from our central planners. Who is going to jump out of the window if the Fed cuts its monthly bond-buying by $10B? I say we should worry about the consumer here, and not the Fed.

Tuesday, September 3, 2013

You never know what you may find on comparison charts these days. This weird correlation just came up on my radar. TSLA and TNX are the least expected trading vehicles to be plotted on the same chart (at least by this blogger).

I think that high-fliers along with US 10-Yr Treasury Yield are going to take a dive soon. What will trigger the plunge? Here are my reasons:

Lack of meaningful taper at the September FOMC meeting. I expect a small symbolic gesture from Fed (on the scale of $10B monthly bond-buying reduction) totally spooking and confusing stock market bulls.

Syrian crisis. A quick military campaign is a dream, imho.

Weak seasonal pattern. Middle of Sep to beginning of Oct is almost always a stock market turbulence trigger.

And some corporate earnings disappointments in a form of pre-announcements from discretionary sector, as consumers' exuberance is taken back by rising gas prices (as a result of the Middle-Eastern conflict), and by the lack of sustained recovery in the job market.

So why am I mentioning TSLA? For me, TSLA symbolizes a stock market pipe dream under current unlimited liquidity conditions. Good news gets better, shorts get killed, and nobody cares where the valuation is any more. It reminds me of AAPL at $700, when everything was priced in the stock. I see TSLA down at $130 before the end of the year. Yep, a bear market recharge (pun totally intended).

And in the case of TNX, it is up against a tough 3% barrier, which even if breached for a day or two, may end up being the high for 2013. I see it coming down to 2.5% and consolidating there before the next leg up starts.

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